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Corporate/Business
Business and corporate law is the body of law which governs business and commercial transactions and provides liability shields to company owners. Business law affects corporations, sole proprietorships, partnerships, and limited liability companies. If you are engaged in business, it is vital that you understand the implications of your business entity, and that you make the necessary structural changes to protect your personal assets from liability. Attorneys at Dickson Steinacker make it a point of emphasis to be fluent in all forms of business association. From partnerships to limited liability companies to corporations, Dickson Steinacker is able to provide the representation you need to create, maintain, or defend your business entity. The following is a summary of the common types of business and corporate law entities and issues:
Corporations
A corporation is a business entity registered with the Secretary of State. It acts as an artificial being, able to transact business and initiate, or be subject to, litigation. Ownership of a corporation is accomplished by holding shares of stock. By selling stock, corporations are able to generate funds to start a business or increase capital. The primary benefit in establishing a corporation is the shield that the owners have from liability. Shareholders and officers of the corporation are protected from personal liability for claims against the corporation. This protection is not absolute. Under certain circumstances (usually related to fraud) officers and shareholders may be held personally liable for the conduct of the corporate entity.
Limited Liability Companies (LLC)
Similar to corporations, LLCs provide entities with the shield of limited liability, but the tax treatment and flexibility similar to a partnership. Personal assets (like a home for example) are not subject to the debts and liabilities of the company. This liability shield is not foolproof. As with corporations, under limited circumstances a person can “pierce the corporate veil” and reach an individual’s assets.
Partnerships
Partnerships are simply defined as a business enterprise created to generate profit, but that is owned by more than one individual. These business entities can be created formally (through a written instrument) or by a simple oral agreement. Each individual partner contributes capital to the entity (such as labor, expertise, equipment, money, assets, etc.) in return for a percentage of the ownership. Most partnerships are not protected by limited liability, meaning that the individual members of the partnership are personally responsible for the liabilities and debts of the business.
Contracts
A contract is a legally binding agreement between two or more individuals. Contracts form when three important legal facts exist—an (1) offer, (2) acceptance of that offer, and (3) exchange of consideration. A contract breach arises when anything other than the promised performance is tendered. For instance, if Jane offers to purchase John’s lawnmower for $500, and he accepts, a contract is formed. Satisfactory performance of the contract would occur when John provides the lawnmower and Jane reciprocates by paying the promised $500. If, for example, John provides a shovel in place of a lawnmower, or Jane does not pay the full amount, then the contract is breached. Depending on the degree of the breach and the terms of the agreement, the breaching party would owe damages (usually in the form of money) to the other party.
Mergers and Acquisitions
A merger of two corporations usually denotes the joining together of two separate corporations whereby one corporation transfers all of its assets to another, being essentially swallowed up by the receiving company. An example of a corporate merger would be the acquisition by Macy’s department stores of The Bon Marche’.
Non-Profit Corporations
Though these corporations exhibit many of the same characteristics as regular, for-profit corporations, they are treated much differently by the state. Generally, these corporations deal with educational, social, religious, civic or other humanitarian issues. While the incorporators, boards of directors, and officers may receive a reasonable salary to perform their administrative duties, they do not receive distributions of profits generated by the corporation. There are no shareholders in non-profit corporations.
